Barrel Strength

Peter Foster asks in today’s Financial Post:

“To put it in a nutshell, why is valid economic theory so counter-intuitive to the human mind? Also, why do liberals feel the need to get on such a moral high horse in their condemnation of economic truths?”

Answer to the first question: Envy. And a wise concern for not being cheated.
Answer to the second question: Moral superiority is its own reward.

My point is that liberal market societies have emerged from certain historical processes, late in time, and could be lost for millennia if certain conditions are not satisfied.

Liberal market societies, as I define them here, are founded on broadly distributed property and clear legal systems with reasonably fair contract enforcement. They are rather late in historical time, though trade has been the foundation of human society. Indeed, if you believe Jane Jacobs, trade led to settlements before there was agriculture. Settlements called forth agriculture to feed the trading population, she says, and to me, this makes sense.

Though trade has characterized humanity for the last hundred thousand years, it vied with conquest and enslavement as ways of getting wealthy. Before there could be liberal market societies, as opposed to simply trade which naturally occurs in society, we had to get rid of slavery. Slavery was the bane of the ancient world, depressing innovation and industrialization throughout the Roman and other slave-based empires. Indeed, though they get little credit for it, the Germanic invaders of the Roman Empire put a stop to both widespread slavery and the cruelty of the gladiatorial games.

No society founded on slavery can ever maintain industrialization. You cannot compete against free labour. And there is no need to innovate if you do not face competition from better processes, which slavery inhibits. The source of capital in society becomes slaves, and in conditions of slavery they do not reproduce themselves adequately to maintain the stock of “capital”. A slave society always seeks to expand so that it can capture fresh capital, that is, slaves. It never develops the habits of mind that lead to an increase of wealth through more efficient production. By that logic, the stabilization of the Roman Empire’s borders along the Rhine in the time of Augustus may have been the beginning of the end, if that stabilization led to the eventual end of the supply of slaves.

Once we got rid of slavery and the Roman Empire with it, we had to get rid of the feudalism which took its place. The same Germanic invaders of Roman Europe maintained or intensified the enserfment of the peasant populations of the late Roman Empire. Ownership of the land fell into very few hands – those of the horse-back conquerors. It was not until property rights and property itself were more broadly distributed that market societies could grow. It was cities, once again, that broke apart feudalism. Trade and innovation occurred in and between cities, where overlords could not despoil or appropriate the wealth which was being created there.

Once you have cities you have specialized trade, and an increase of wealth, which tempts those who own force to seize it, tax it, or drive it away. So some form of social contract has to emerge between political authority and the trading classes. This took centuries to evolve in England, complete with civil wars, religious transformations, and defeated foreign invasions. In many parts of Europe, the balance of power between state and society was decisively overthrown by centralizing monarchies, which looked like the progressive ideology of the 17th century. Louis XIV rid his kingdom of the 10% of the population who belonged to the Protestant religion for purely religious reasons. The loss of those French Protestant exiles was the beginning of the end of the Ancien Regime in France. Huguenots were decisive in the rise of the city of Berlin, and the increase of trde in Amsterdam and London, where they found acceptance. I cite this as an illustration that trader minorities can be ethnically and linguistically identical to their countrymen, and still be ruined by religious intolerance. The Protestants of Bohemia suffered a similar fate under the Hapsburgs.

Meantime, the priestly classes, which in European history were Christian but have lately gone over to the religion of Gaia, are always condemning the accumulation of wealth and saying that the path to heaven lies through abandoning wealth, specifically, to the institutions they inhabit. It also does not help if, by the operation of religious prohibitions, special trader minorities, such as Jews, are relegated the odious tasks of lending money at interest. The insertion of trader minorities into economic transactions always makes it look to peasant populations – and the world before 1900 was and remains largely peasant- that economics are the nasty dealings of foreign national and religious minorities, rather than the normal business of everyone.

Envy: A Theory of Social Behaviour - Helmut Schoeck wrote a book of that title, and it stands with Hayek’s Road to Serfdom as one of the vital books for understanding why markets took so long to emerge. Envy is the only sin which is directed against the success of others. Schoeck maintains that it is a pervasive feature of most human societies, and secondly that the decisive influence of the Reformation was to lower the level of envy in society, by deligitimizing it. If you are among the elect, then no one can deny you entrance to heaven. So relax, don’t envy the rich. You have either been appointed to the Elect before all time, or you have not. In any case the accumulation of wealth may be God’s work, and if you cannot do that for yourself, you need not envy the worldly-successful because you may already have won the Cosmic Prize of Salvation anyway.

Schoeck’s thesis is that most redistributionist ideologies are essentially the tools of a priestly class to accumulate power for themselves, abetted by the envy of the masses against the rich. (Viz: the carbon tax, sumptuary taxes on SUVs, Marxism etc) No wonder people pretend that envy does not exist; they do not want you to notice it, so it can be manipulated better. Schoeck asserts that envy must be suppressed by childhood and social upbringing for the modern market society to work effectively.

Now that we have reached envy as the explanation for why it took so long to reach liberal market societies, in a fantastically abbreviated pocket history of Europe since the reign of the Emperor Augustus, year 0, we arrive simultaneously at the answer to question 2, why “liberals”, as Mr. Foster calls them, feel the need get on their moral high horse about economic truths.

Although these people are called “liberals” in common parlance, they are not liberals but anti-liberals. They are the statists and would-be priests of the new religions. Their call is always that superior people such as themselves have a claim to social resources, generally through taxation, to redistribute wealth because they are morally superior. It is not really argued so much as asserted.

Everyone wants to be morally right, but  many want to be morally superior. How often do we see finger-wagging letters to the editor proclaiming the moral superiority of them who have a small carbon footprint? In former times they asserted moral superiority according to Christian ideas. It hardly matters what the ideology is. Its real purpose is to provide the legitimation of would-be ruling or priestly classes with the notion that some gesture is saving the planet. I have seen a man turn down the offer of a plastic bag at the store saying that he was “saving the planet”. We have all seen likewise. He probably believes what he said, too.

New categories of sin can be created to justify their rule. With the Catholic Church, it is lust. With the Marxist religion, it is the appropriation of surplus from the workers – selling for more than the sum of input costs.  With the Gaian religion, it is breathing and keeping warm, since the end absurdity of “climate change” is that carbon dioxide production is itself an evil. Notice that all these sins are absolutely inherent in human nature. Having created the problem for which they are the solution, the new priests allow you to atone by the sale of indulgences and other mortifications, or, in the case of the Marxists, they shoot you and take over your factory or store. Modern politico-religious manias are so much more thorough-going than ancient traditional religions.

But the urge to be morally superior is inherent in human nature. If you can earn a living at it, so much the better. In the past we dealt with such urges by allowing people to become monks and nuns, where their economic doctrines could do no harm, and their energies could be turned to education and health care, as we now call it.

Now the same people want to govern us for our own good, and their pretensions, being backed by dubious science, can only be realized by shutting down discussion.

Why do people screw up? The issue is moral, not economic.